The purpose of this essay is to explain a complicated and important issue in practical terms. For those who are interested in the technicalities, the footnotes contain detailed documentation to complement and substantiate the main text. All financial data is based on figures produced by the U.S. government. Since these figures are constantly changing, for the purpose of uniformity, the year 2000 is used as a baseline.

The Impact of Social Security on the National Debt

By James D. Agresti

September 1, 2001

As of December 2000, more than a trillion dollars of the U.S. national debt is owed to the Social Security program.[1][2] This amounts to $3,600 for every man, woman, and child living in the United States.[3] By 2015, this figure is projected to reach $9,000 per person, burdening young people with a debt that they had no part in creating.[4][5] To make matters worse, some politicians are pushing a proposal to "save Social Security" that would increase this figure dramatically.

This essay will explain and substantiate the following points:

Citizens are being misled about the national debt.

Despite what you've been told, the budget has not been balanced for the past 3 years.

Every dollar in the Social Security Trust Fund is matched by a corresponding dollar of national debt.

What is referred to as "raiding the Social Security Trust Fund" has no effect on the Social Security Trust Fund. Its real effect is to raise the national debt.

What is referred to as "putting Social Security into a lockbox" has no effect on Social Security.

Some politicians are promoting a plan to "save Social Security" that could add 9 trillion dollars to the national debt.

Privatization would block politicians from using Social Security as a smokescreen to run up debt behind the backs of citizens.

Citizens are being misled about the national debt

More often than not, when a politician or reporter uses the term "national debt," they are not really referring to national debt. They are only referring to a portion of it.
The United States government divides the national debt into two categories:

Money that it owes to federal entities such as the Social Security program.

Money that it owes to non-federal entities such as individuals who have purchased U.S. Savings Bonds.[6]

The debt owed to federal entities accounts for more than 45% of the national debt, yet it is often dismissed or ignored. The excuses that people use to justify disregarding this portion of the national debt generally run along the lines of, "This is just money that the federal government owes to itself. It's only a bookkeeping device. It's as if you owed money to yourself." This line of reasoning ignores the fact that U.S. taxpayers have to pay for this debt. The federal law that governs the payment of the national debt draws no distinction between money owed to federal versus non-federal entities. Both must be paid with interest.[8]

A prime example of downplaying the debt owed to federal entities appears in a 207 page economic plan published by the Bush administration. Not until page 201 is there any mention of the full national debt. This plan states that Bush will retire "$2 trillion in debt over the next ten years."[9] The problem is that this figure only applies to the debt owed to non-federal entities.[10] What about the rest of the debt? Buried in a table on page 201, we find that the debt owed to federal entities increases by 3.8 trillion dollars, and the overall national debt increases by 1.5 trillion dollars.[11]

Worse than this, some people completely ignore the debt owed to federal entities, but have no problem with including it in the assets of the federal programs to which the money is owed. During the 2000 presidential race, the Gore-Liebermann campaign released a 192 page economic plan that contained over 150 uses of the word "debt." This plan does not mention or even acknowledge any of the debt owed to federal entities.[12] Yet, the plan states that the Social Security program will remain solvent until 2037.[13] Contrast this assertion with the fact that in 2015, the Social Security program is projected to start spending more money that it collects in taxes.[14] This is a 22 year discrepancy. How does Social Security stay solvent for 22 years while spending exceeds tax revenue? It collects on the money that it has loaned to the federal government; i.e. the debt owed to federal entities. If Gore and Liebermann want to dismiss the debt that the federal government owes to Social Security, to be consistent, they would also have to state that the program would become insolvent in 2015. But they don't do this. They pretend as if the federal government doesn't have to repay the money that it has borrowed from Social Security while simultaneously including this money in the assets of the Social Security program.

Members of both political parties have distorted this issue on numerous occasions, and the vast majority of news reports on the subject that have been reviewed by Just Facts contain varying degrees of misrepresentation or inaccuracy. A simple rule of thumb to keep yourself from being duped is to be familiar with the numbers. As of December of 2000, the national debt is about 5.7 trillion dollars and the annual interest on it is about 373 billion dollars.[15] If your favorite newspaper or public servant cites figures that are significantly different, be aware. The U.S. Government keeps an up to date accounting of the national debt at
http://www.treasurydirect.gov/NP/BPDLogin?application=np [Revised 9-27-09]

Despite what you've been told, the budget has not been balanced for the past 3 years

Since 1998, politicians, TV networks, radio stations, magazines and newspapers have referred to the budget as "balanced."[16][17][18][19][20] This is not consistent with the fact that the national debt has risen every year since 1960, including 1998, 1999, and 2000.[21] The numbers below come directly from the United States Bureau of the Public Debt.

How can the budget be "balanced" while the national debt is rising? It depends upon on how one defines the "national debt." If someone's definition of national debt excludes the debt owed to federal entities, they are not accounting for the interest on the debt owed to federal entities. This is exactly what has been going on.[23][24]

Every dollar in the Social Security Trust Fund is matched by a corresponding dollar of national debt

The "Social Security Trust Fund" is an account that contains the assets of the Social Security program.
In 52 of the 63 years that Social Security has existed, it has run surpluses.[25]
What does Social Security do with this surplus money? By law, the only thing that Social Security can do with this money is to purchase federal bonds. Consequently, all of the assets in the Social Security Trust Fund are in the form of federal bonds.[26][27]

A point worth noting here is that buying federal bonds is the same thing as loaning money to the federal government. When someone buys a federal bond, what they are buying is a promise from the federal government to return to them the money that they paid for the bond plus some interest.[28] When a person borrows money, it is referred to it as "borrowing money." When the government borrows money, it is referred to "issuing bonds." The next time you run up $1,000 on your credit card, tell yourself or your spouse that you are issuing bonds. It sounds a lot better, and it may get you off the hook; at least in the short term.

For this reason, some people refer to the bonds in the Social Security Trust Fund as "worthless IOU's." This characterization is inaccurate. The bonds in the Trust Fund are as real as any U.S. Savings Bond that you might happen to own. The Social Security program loaned this money to the federal government and has a legal right to receive it back with interest.[29]

This can be a difficult concept to grasp, because it doesn't make sense that the federal government owes money to a federal program like Social Security. The key to keeping this straight in your head is to be aware of the following facts:

2) The finances of the Social Security program are separated by law from the rest of the federal government.[31]

On the other hand, some people talk about the Social Security Trust Fund as if it were a pile of money sitting in a vault in Washington D.C. This is also inaccurate. The federal government has borrowed this money from Social Security and used it for other purposes. When Social Security cashes in its bonds, the federal government will need to come up with the money to pay Social Security back. Where is this money going to come from? The federal government has two options: Take it from people by taxing them, or borrow it.[32]

The bonds in the Social Security Trust Fund are assets for those people who will be receiving Social Security benefits at the time when these bonds are cashed in, but these same bonds are also debt for those people who will be paying income taxes at that time. As a side note, the national debt is not paid for with Social Security taxes. It is paid for with income taxes, corporate taxes, sales taxes, and excise taxes.[33][34]

To summarize, the Social Security program has assets; not worthless IOU's, but every dollar in the Trust Fund is matched by a corresponding dollar of national debt.

What is referred to as "raiding the Social Security Trust Fund" has no effect on the Social Security Trust Fund. Its real effect is to raise the national debt

When a politician is looking to scare up votes from senior citizens, a tried and true tactic is to accuse their opponents of "raiding the Social Security Trust Fund." It may be hard to accept the following facts because people have been told the opposite for years, but not only is it against the law to touch the Social Security Trust Fund for anything other than Social Security, it has never happened.[35][36]

Many people make the mistake of thinking that President Lyndon B. Johnson started using Social Security Trust Funds to finance other government programs. In 1969, Johnson started combining the financial data of the Social Security program with the financial data of the federal government for the purpose of reporting the budget. Up until that time, when the federal government reported its budget, it treated Social Security consistent with the fact that its finances are separated by law from the rest of the federal government. In 1969, the federal government was running a deficit and the Social Security program was running a surplus. By adding the two together, Johnson was able to tell the American people that the federal budget had a surplus, while in reality, it had a deficit. This was a considerable negative because the budget deficit was hidden from the public, however, Johnson did not change the actual finances of the federal government or the Social Security program; only the manner in which they were reported.[37]

So what does "raiding the Trust Fund" mean? When Social Security loans money to the federal government, the government can either spend the money or use it to pay off someone else that the federal government owes money to. If the federal government spends the money, this action is what some people refer to as, "raiding the Social Security Trust Fund."

This is an inaccurate description of what is taking place because not one dime is taken out of the Social Security Trust Fund. Examine this scenario from Social Security's standpoint. Social Security loans money to the federal government and will collect on the money and interest in the future. Now examine it from the federal government's standpoint. The federal government borrows money from Social Security and spends it. This increases the national debt.

The point to realize here is that it is not Social Security or senior citizens who get a raw deal in this situation, but younger people who will be stuck paying the debt in the future.

What is referred to as "putting Social Security into a lockbox" has no effect on Social Security

"I will put Social Security into a lockbox." This is one of the most common campaign promises. What does it mean? It means that Social Security loans its surplus money to the federal government, and the federal government uses the money to pay off someone else it owes money to.

Examine this scenario from Social Security's standpoint. Social Security loans money to the federal government and will collect on the money and interest in the future. As far as Social Security is concerned, this is no different than what happens during the so-called "raiding the Trust Fund" scenario. Now look at this from the federal government's standpoint. The federal government borrows money from Social Security and uses it to pay off debt that it owes to someone else. This leaves the national debt exactly as it was. It's like using one credit card to pay off another.[38]

Although the effect on Social Security and the national debt is neutral, it would be great if this always happened, because the alternative is that the federal government borrows the money from Social Security and spends it, which increases the national debt. In 1999, Republican Congressman Wally Herger sponsored a "lockbox" bill in the House of Representatives. This law would have restricted Congress from using money borrowed from the Social Security program to spend on other government programs. It passed the House by a vote of 416 to 12.[39] In the Senate, Republicans attempted to bring this bill up for a vote. To do this, 3/5 of the Senators must agree to do so. The motion to bring this bill up for a vote failed. 100% of Republicans voted for it. 100% of Democrats voted against it.[40]

Again, the key point to realize is that there is no effect on Social Security. Also, in this instance, there is no effect on the national debt.

Some politicians are promoting a plan to "save Social Security" that could add 9 trillion dollars to the national debt

In 1999, the Clinton administration devised a plan to "save Social Security."[41][42] Since then, Al Gore, Joe Liebermann, and the Democratic Party have endorsed and promoted this plan.[43][44] By taking advantage of several of the canards exposed above, they portray it as responsible and painless, but the truth is that it would place an enormous financial burden on younger people. It works like this:

In the first debate of the 2000 presidential election, Al Gore stated:

"I will keep Social Security in a lockbox, and that pays down the national debt. And the interest savings, I would put right back into Social Security. That extends the life of Social Security for 55 years."[45]

These assertions contain a series of lies that build upon one another to create a 9 trillion dollar illusion. This figure amounts to $32,000 for every man, woman, and child living in the USA.[46]

Lie # 1 (the foundation): "I will keep Social Security in a lockbox, and that pays down the national debt."

As explained above, keeping Social Security in a lockbox does not pay down the national debt. It only pays down the debt to non-federal entities, which is offset dollar for dollar by increased debt to federal entities.[47][48][49]

Lie # 2: " And the interest savings, I would put right back into Social Security."

Since the national debt remains unchanged, there are no interest savings. In addition, the average interest rate on the debt owed to federal entities is slightly higher than the interest rate on the debt owed to non-federal entities.[50]

Lie #3: "That extends the life of Social Security for 55 years."

Since there are no interest savings, how does the Democratic Party intend to extend the life of Social Security for 55 years? A careful study of the proposal reveals that it actually involves taking money from the federal government and funneling it over to the Social Security program. It would obligate the federal government to pay 9 trillion dollars to the Social Security program above and beyond the money that the federal government legitimately owes to Social Security.[51] Since the federal government is not projected to have this money, it would require increased taxes, cuts to federal programs, increased debt, or a combination of these.[52]

The GoreLieberman economic plan asserts that the money used to extend the life of Social Security is "based on actual resources that are freed up by devoting the Social Security surpluses to debt reduction."[53] For anyone not yet convinced that this is a bald-faced lie, consider the following. Gore's economic plan contains a 10-year budget proposal because this is the standard timeframe used for such proposals. It contains real numbers; i.e. "actual resources." How much money does this 10 year budget allocate to extending the life of Social Security? Not one penny. Gore's plan to "save Social Security" is structured so that none of the $9 trillion it requires is needed until 11 years into the future.[54] Why 11 years? No reason is given. It corresponds to nothing except the date that his budget ceases to show "actual resources."

Most people don't have the time to dissect issues like this, and they are dependent upon the press to do it for them. After the debate referenced above, ABC, NBC, and CNN employed truth squads to judge the accuracy of Bush's and Gore's statements. None of these networks questioned Gore's assertions regarding this issue.[55][56][57] To boot, the day after the debate, George Stephanopoulos, a member of ABC's truth squad, stated on Good Morning America that "Gore exaggerated a little bit . but there were no big, big lies or distortions."[58] Of course, it is always possible that 9 trillion dollars doesn't fit Stephanopoulos's definition of "big, big."

Privatization would prevent politicians from using Social Security as a smokescreen to run up debt behind the backs of the American people

Social Security in its current form is a tool that politicians can use to drive our country into debt without the public knowing about it. Between 2001 and 2010, the Social Security program is projected to collect 5,502 billion dollars in taxes and spend 4,726 billion dollars on benefits and administrative overhead. This leaves $776 billion in surpluses.[59] If things remain as they are, the law requires that all of this money be loaned to the federal government.[60] Once this money is in the hands of the federal government, it is up for grabs.[61]

Privatization would put Social Security surpluses into the accounts of individual citizens. This money would be their personal property that no one could touch (including the individuals who own it) until they are eligible to receive Social Security benefits. The concept is simple: Get the money out of the reach of politicians. If they don't have it, there is no way they can spend it or take advantage of a confusing situation to make people believe that they are saving it.

Note - Just Facts has conducted an in-depth study of the numerous aspects of
Social Security. In addition to basic information, we have data that you won't
find anywhere else and facts that dispel many of the myths that people believe
about Social Security. For comprehensive details go to Social Security, or for
a more basic list of facts go to Social Security Basics.

Sources

[1] "Monthly Statement of the Public Debt of the United States." The Bureau of the Public Debt - Treasury of the United States of America, December 31, 2000. Accessed at
ftp://208.131.225.4/opd/opdm122000.pdf in August of 2001. Notes:A) Social Security is comprised of the "Federal Disability Insurance Trust Fund" and the "Federal Old-Age and Survivors Insurance Trust Fund." Both of these appear on page 7 in "Table III - Detail of the Public Debt Outstanding."B) The actual figure is $1,016,292,000,000.

[2] "Frequently Asked Questions about the Public Debt." The Bureau of the Public Debt - Treasury of the United States of America, Updated August 4, 2000. Accessed at
http://www.publicdebt.treas.gov/opd/opdfaq.htm in December of 2000.Notes:A) This document states: "Additionally, the Government Trust Funds are required by law to invest accumulated surpluses in Treasury securities. The Treasury securities issued to the public and to the Government Trust Funds then become part of the public debt."

[4] "The 2000 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." March 30, 2000. Accessed at
http://www.ssa.gov/OACT/TR/TR00/index.html in June of 2001.Notes:A) Page 221 states: "Funds not withdrawn for current monthly or service benefits, the financial interchange, and administrative expenses are invested in interest-bearing Federal securities, as required by law; the interest earned is also deposited in the trust funds."B) Page 179 projects that the assets of the Social Security Trust Funds at the end of 2015 will be $2,879,800,000,000.C) Page 147 projects the population of the U.S. in 2015 will be 320,149,000.

[5] "Social Security Trust Funds: Frequently Asked Questions." Social Security Administration of the United States of America, June 7, 1999. Accessed at
http://www.ssa.gov/OACT/ProgData/fundFAQ.html in May of 2001. Notes: A) This document states: "By law, all income to the trust funds that is not immediately needed to pay expenses is invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government."

[6] "Frequently Asked Questions about the Debt." The Bureau of the Public Debt - Treasury of the United States of America, Updated March 13, 2001. Accessed at
http://www.publicdebt.treas.gov/opd/opdfaq.htm in April of 2001. Notes: A) There is considerable confusion regarding the terminology associated with the national debt. The Bush administration uses the terms "debt held by the public" and "intragovernmental holdings" to describe the two categories of national debt. The Clinton administration used the terms "publicly held debt" and "government held debt." Just Facts uses the terms "debt owed to federal entities" and "debt owed to non-federal entities" because they are more descriptive and less confusing. For example, using the Bush Administration's terminology, if the federal government owes money to a local government, this would fall into the category of "debt held by the public." This is confusing because one would expect that money owed by one government to another would fall into the category of "intragovernmental holdings." As the reference document states, this is not the case. Another large source of confusion has to do with us the use of the word "public." This is because the term "public debt" refers to the overall national debt, yet the term "publicly held debt" only refers to a portion of the national debt. To complicate matters further, sometimes politicians and reporters incorrectly use the term "public debt" when they are really referring to the "publicly held debt." To avoid this confusion, Just Facts coined the terms that we use. The exception to our terminology is Federal Financing Bank securities, which are limited to 15 billion dollars. B) Listed below are some frequently used terms categorized by their proper meanings: (a) Overall national debt  national debt, public debt, gross debt, debt. (b) Debt owed to federal entities  Nonmarketable debt, Intragovernmental holdings, debt held by the government, government held debt. (c) Debt owed to non-federal entities  Marketable debt, debt held by the public, publicly held debt. (Note - A small amount of marketable debt is owned by federal entities.)

[7] "Monthly Statement of the Public Debt of the United States." The Bureau of the Public Debt - Treasury of the United States of America, December 31, 2000. Accessed at
ftp://208.131.225.4/opd/opds122000.pdf in May of 2001.

[10] "A Blueprint for New Beginnings  A Responsible Budget for America's Priorities." Executive Office of the President of the United States, February 28, 2001. Accessed at
http://www.whitehouse.gov/news/usbudget/blueprint/budtoc.html in April of 2001. Notes: A) A footnote on Page 11 of this document states that the 2 trillion dollar figure is "publicly held debt."B) In this footnote, the numbers cited do not include the debt owed to federal entities.

[11] "A Blueprint for New Beginnings  A Responsible Budget for America's Priorities." Executive Office of the President of the United States, February 28, 2001. Accessed at
http://www.whitehouse.gov/news/usbudget/blueprint/budtoc.html in April of 2001. Notes: A) Page 201 contains a chart with a section labeled, "Held By." Examine the line item, "Debt securities held as assets by Government accounts." This is the debt owed to federal entities. Between 2001 and 2011, it rises by 3,782 billion dollars.B) Page 201 contains a chart with a section labeled, "Debt Outstanding, End of Year." Examine the line item, "Total, gross federal debt." This is the national debt. Between 2011 and 2001, it increases by 1,530 billion dollars.

[12] "Prosperity for America's Families  The Gore Lieberman Economic Plan." Gore/Lieberman, Inc., September 2000. Accessed at
http://www.cnn.com/2000/ALLPOLITICS/stories/09/06/gore.economic.plan/gore_prosperity.pdf in May of 2001. Notes:A) This 192 page document was searched cover to cover on 3 separate occasions for any inclusion or acknowledgement of the debt owed to federal entities. In all instances, this debt is excluded. B) In this document, the phrases "publicly held debt" and "debt held by the public" are used a total of 5 times. On more than 150 other occasions, the document uses terms such as "debt," "public debt," and "national debt," when in fact, it is really referring only to the debt owed to non-federal entities.

[14] "The 2000 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." March 30, 2000. Accessed at
http://www.ssa.gov/OACT/TR/TR00/index.html in June of 2001.Notes:A) Page 3 of this document states: "[Social Security] tax revenues are expected to exceed expenditures until 2015."B) Nowhere in the Gore/Lieberman plan is this fact mentioned. The Bush plan includes this fact on page 22.

[15] "Monthly Statement of the Public Debt of the United States." The Bureau of the Public Debt - Treasury of the United States of America, December 31, 2000. Accessed at
ftp://208.131.225.4/opd/opds122000.pdf in May of 2001.Notes:A) The total interest bearing debt is $5,618,061,000,000 and average interest rate is about 6.642%. This means that the annual interest on the national debt is about $373,152,000,000.B) A small portion of the national debt (less than 1%) does not bear interest.

[23] "The Budget and Economic Outlook: Fiscal Years 2002  2011, Chapter 1." The Congressional Budget Committee, January 2001. Accessed at
http://www.cbo.gov/showdoc.cfm?index=2727&sequence=2 in May of 2001.Notes:A) In table 1-2, this document states that the interest on the debt in 2000 was 223 billion dollars.

[24] "Interest Expense on the Debt Outstanding." The Bureau of the Public Debt - Treasury of the United States of America, Updated April 18, 2001. Accessed at
http://www.publicdebt.treas.gov/opd/opdint.htm in May of 2001.Notes:A) This document states that the interest on the debt in 2000 was 362 billion dollars.B) The difference between the figures cited by the Bureau of the Public Debt and the Congressional Budget Office is resolved by including the debt owed to federal entities.

[25] In actuality, there are two Social Security Trust Funds. The following documents contain an annual accounting of the surpluses and assets of the Social Security program from 1937 to 2000: A) "Financial data for the Old-Age, Survivors, and Disability Insurance Trust Funds, 1957-2000." Office of the Chief Actuary - Social Security Administration of the United States of America, Updated May 14, 2001. Accessed at
http://www.ssa.gov/OACT/STATS/table4a3.html in May of 2001. B) "Financial data for the Old-Age and Survivors Insurance Trust Fund, 1937-2000." Office of the Chief Actuary - Social Security Administration of the United States of America, Updated March 2, 2001. Accessed at
http://www.ssa.gov/OACT/STATS/table4a1.html in May of 2001.

[26] "The 2000 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." March 30, 2000. Accessed at
http://www.ssa.gov/OACT/TR/TR00/index.html in June of 2001. Notes:A) Page 221 of this document states: "Funds not withdrawn for current monthly or service benefits, the financial interchange, and administrative expenses are invested in interest-bearing Federal securities, as required by law; the interest earned is also deposited in the trust funds."

[27] "Social Security Trust Funds: Frequently Asked Questions." Social Security Administration of the United States of America, June 7, 1999. Accessed at
http://www.ssa.gov/OACT/ProgData/fundFAQ.html in May of 2001.Notes: A) This document states: "By law, all income to the trust funds that is not immediately needed to pay expenses is invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government."

[28] "History Myths - Social Security Trust Funds." History Page, Social Security Administration of the United States of America. Accessed at
http://www.ssa.gov/history/offbudget.html in March of 2001.Notes:A) This document states: "The basic fact of all Treasury securities of whatever form is that they are promissory notes issued by the Federal government--promises to pay money at some time in the future."

[29] "The 2000 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." March 30, 2000. Accessed at
http://www.ssa.gov/OACT/TR/TR00/index.html in June of 2001.Notes:A) Page 7 of this document states: "The invested assets of the trust funds are backed by the full faith and credit of the U.S. Government, in the same way as other public-debt obligations of the United States."B) Page 221 of this document states: "Funds not withdrawn for current monthly or service benefits, the financial interchange, and administrative expenses are invested in interest-bearing Federal securities, as required by law; the interest earned is also deposited in the trust funds."C) Contrary to popular belief, the actions of President Lyndon B. Johnson have no effect on this fact. For a detailed explanation, go to footnote 37.

[30] "The Social Security Act of 1935." The Senate and House of Representatives of the United States of America, August 14, 1935. Accessed at
http://www.ssa.gov/history/35act.html in May of 2001.Notes: A) Title VIII- Taxes With Respect to Employment

[31] "The 2000 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." March 30, 2000. Accessed at
http://www.ssa.gov/OACT/TR/TR00/index.html in June of 2001. Notes:A) Page 33 of this document states that the Social Security Trust Funds were established as "separate" accounts in the United States Treasury and that "all the financial operations" of Social Security are handled through these funds.B) Page 37 of this document states: "The Social Security Act does not permit expenditures from the [Social Security] Trust Funds for any purpose not related to the payment of benefits or administrative costs for the [Social Security] program."

[32] "History Myths - Social Security Trust Funds." History Page, Social Security Administration of the United States of America. Accessed at
http://www.ssa.gov/history/offbudget.html in March of 2001.Notes:A) This document states: "When any bondholder presents their Treasury securities for redemption, the Treasury must either raise cash by taxation or by additional borrowing to pay off the bondholder. This is true for all Treasury securities, including the assets held by the Social Security Trust Funds."

[33] "The 2000 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." March 30, 2000. Accessed at
http://www.ssa.gov/OACT/TR/TR00/index.html in June of 2001.Notes:A) Page 37 of this document states: "The Social Security Act does not permit expenditures from the [Social Security] Trust Funds for any purpose not related to the payment of benefits or administrative costs for the [Social Security] program." This prohibits the use of Social Security taxes to pay for the national debt.

[34] "America to Celebrate Tax Freedom Day on May 3, 2000" The Tax Foundation, April 13, 2000. Accessed at
http://www.taxfoundation.org/taxfreedomday.html in April of 2001. Notes: A) This document lists the different types of federal taxes. Social Security taxes fall under the category of "Social Insurance Taxes"

[35] "The 2000 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." March 30, 2000. Accessed at
http://www.ssa.gov/OACT/TR/TR00/index.html in June of 2001.Notes:A) Page 37 of this document states: "The Social Security Act does not permit expenditures from the [Social Security] Trust Funds for any purpose not related to the payment of benefits or administrative costs for the [Social Security] program."

[36] The following documents contain an annual accounting of the surpluses and assets of the Social Security program from 1937 to 2000. All of the money that came into the Social Security program was used for Social Security benefits and administrative expenses, or placed in the appropriate Trust Fund.A) "Financial data for the Old-Age, Survivors, and Disability Insurance Trust Funds, 1957-2000." Office of the Chief Actuary - Social Security Administration of the United States of America, Updated May 14, 2001. Accessed at
http://www.ssa.gov/OACT/STATS/table4a3.html in May of 2001. B) "Financial data for the Old-Age and Survivors Insurance Trust Fund, 1937-2000." Office of the Chief Actuary - Social Security Administration of the United States of America, Updated March 2, 2001. Accessed at
http://www.ssa.gov/OACT/STATS/table4a1.html in May of 2001.

[46] "Regional Accounts Data  Population." Bureau of Economic Analysis, 2000. Accessed at
http://www.bea.doc.gov/bea/regional/spi/ in May of 2000. Notes: A) The 9 trillion dollar figure is substantiated later in the essay. B) As of 2000, the population in the U.S. is 281,421,906.

[47] "Social Security Trust Funds: Frequently Asked Questions." Social Security Administration of the United States of America, June 7, 1999. Accessed at
http://www.ssa.gov/OACT/ProgData/fundFAQ.html in May of 2001. Notes: A) This document states: "By law, all income to the trust funds that is not immediately needed to pay expenses is invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government."

[48] "Frequently Asked Questions about the Public Debt." The Bureau of the Public Debt - Treasury of the United States of America, Updated August 4, 2000. Accessed at
http://www.publicdebt.treas.gov/opd/opdfaq.htm in December of 2000.Notes:A) This document states: "Additionally, the Government Trust Funds are required by law to invest accumulated surpluses in Treasury securities. The Treasury securities issued to the public and to the Government Trust Funds then become part of the public debt."

[49] "Monthly Statement of the Public Debt of the United States." The Bureau of the Public Debt - Treasury of the United States of America, December 31, 2000. Accessed at
ftp://208.131.225.4/opd/opdm122000.pdf in August of 2001. Notes:A) Social Security is comprised of the "Federal Disability Insurance Trust Fund" and the "Federal Old-Age and Survivors Insurance Trust Fund." Both of these appear on page 7 in "Table III - Detail of the Public Debt Outstanding."

[50] "Monthly Statement of the Public Debt of the United States." The Bureau of the Public Debt - Treasury of the United States of America, December 31, 2000. Accessed at
ftp://208.131.225.4/opd/opds122000.pdf in May of 2001. (This is an Adobe PDF document.)Notes:A) The interest rate on debt owed to non-federal entities is 6.665B) The interest rate on debt owed to federal entities is 6.618

[51] "Long Range OASDI Financial Effects of the President's Proposal for Strengthening Social Security  Information." Letter from Social Security Administration Deputy Chief Actuary Stephen C. Goss to Chief Actuary Harry C. Ballantyne, June 26, 2000. Notes: A) The Clinton administration and Gore campaign cited several actuarial studies of their plans to extend the life of Social Security. Just Facts was unable to find any of these studies on the White House, Gore campaign, or Social Security Administration's web sites. During the Clinton administration, we contacted the Office of the Chief Actuary at the Social Security Administration, and we were told that they did not have these studies. We eventually obtained a copy of this study from the Senate Budget Committee. B) This document states: "This proposal would require that transfers be made from the General Fund of the Treasury of the United States to the [Social Security Trust Funds.]" C) The 9 trillion dollar figure was arrived at by adding up the annual totals listed in this study. The actual figure is closer to 10 trillion dollars. The figures are based on year 2000 dollars.

[52] Mitchell, Daniel J. "The Social Security Trust Fund Fraud." The Heritage Foundation, February 22, 1999. Accessed at
http://www.heritage.org/library/backgrounder/bg1256es.html in December of 2000. Notes: A) This article quotes the Clinton administration budget proposal for the year 2000, which states that the Social Security Trust Funds "do not consist of real economic assets." It also states that the Trust Funds are "claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures."

[54] Prosperity For America's Families  The Gore Lieberman Economic Plan." Gore / Lieberman, Inc., September 2000. Accessed at
http://www.cnn.com/2000/ALLPOLITICS/stories/09/06/gore.economic.plan/gore_prosperity.pdf in May of 2001. Notes:A) Page 185 contains an allocation of the projected surplus for the years 2001 through 2011. It allocates no money to Social Security.B) Page 40 of this document states that "interest savings" will be devoted to Social Security starting in the year 2011.

[59] "The 2000 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." March 30, 2000. Accessed at
http://www.ssa.gov/OACT/TR/TR00/index.html in June of 2001. Notes:A) Figures arrived at by using data on page 179.

[60] "Social Security Trust Funds: Frequently Asked Questions." Social Security Administration of the United States of America, June 7, 1999. Accessed at
http://www.ssa.gov/OACT/ProgData/fundFAQ.html in May of 2001.Notes: A) This document states: "By law, all income to the trust funds that is not immediately needed to pay expenses is invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government."

[61] "History Myths - Social Security Trust Funds." History Page, Social Security Administration of the United States of America. Accessed at
http://www.ssa.gov/history/offbudget.html in March of 2001.Notes:A) This document states: "Like all purchasers of Treasury securities, the Social Security Trust Funds are lending money to the Federal government--money which can be used for any general government purpose."